CodeNEXT Draft 2.0, What it Means for East Austin

The City of Austin released their second draft of the long awaited and largely controversial CodeNEXT zoning revisions last Friday, September 15th. The draft comes in response to the first round of comments and suggestions from the community, and mayor Steve Adler urged critics to continue engaging in the revision process in order to make the third draft more representative of the city's needs.

The CodeNEXT initiative attempts to rectify Austin's development shortcomings, seen largely as a result of the city's continued adherence to out-of-date and out-of-touch zoning codes left over from the 1980's. Honing in on affordability issues, CodeNEXT is primarily concerned with residential density in Central and East Austin. The incentive mechanism, referred to as "density bonuses" will allow developers to build in excess of current unit maximums so long as they commit to reserving a percentage of said units for low-income residents.

Affordability is worthy cause, especially when today's buyers are looking at a median list price per square foot of $377 in historically low-income East Austin. In order to work, however, density bonuses will have a profound affect on the cityscape. In some areas, condominiums could grow from a maximum of four stories to seven. In others, where height restrictions are less flexible, density bonuses would increase density-per acre-allowances nearly three fold, from 24 to 64 units. Such drastic changes have many residents up in arms about the future of their neighborhoods. Ironically, many of these critics are often those concerned with affordability as well.

With CodeNEXT's density bonus program, typical East Austin apartments like these could grow by three stories if developers agree to retain a percentage of their total units for low-income tenants.

But what about the economics of CodeNEXT? Generally, cost-per-unit decreases as one scales up their development. Still, when developers must sell a percentage of their units at a loss in order to increase overall size, that loss must be made up somewhere to balance the sheet. What effect will this have on the cost of those units not reserved for low-income housing? And the resulting effect on affordability at large? Despite the City's best efforts, the housing market is just that: a market. And with an estimated 157 people moving to greater Austin every day, it's hard to imagine even the most draconian regulations controlling the laws of supply and demand.

We'll see these proposals change in the coming months as the city takes into account more community feedback. Austin's aging development regulations have hindered the city, particularly in the large-scale urban growth realized over the past decade. Our thoughts aren't meant to discredit the noble work towards progress. They serve only to highlight that the issue is complicated, and the decisions difficult. Should Austin's rate of growth continue in the coming years, those seeking affordability might find their best bet in the periphery.

Concerned with how CodeNEXT might affect your development? Feel free to contact any of our experts for a consultation!

Have thoughts about how the City of Austin could improve CodeNEXT? Get involved with the revision process here!